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News: Analysis & Commentary: Mexico
REMEMBER THOSE GUYS WHO BROUGHT YOU NAFTA?
It seemed like old times. On Jan. 23, lobbyists from 150 big U.S. companies packed a Capitol Hill room for a homecoming--and a pep rally. "You got us NAFTA. You won the GATT," exhorted Representative Robert T. Matsui (D-Calif.), President Clinton's chief Hill strategist in the North American Free Trade Agreement battle. "Now you can deliver on this one, too."
Within hours, the old business coalition was up and running again. Their latest Mission Impossible: nailing down congressional passage of $40 billion in loan guarantees to save Mexico from its current financial crisis. Corporate America's message, as delivered by CSX Corp. Chairman John W. Snow, who is serving as peso point man for the Business Roundtable: Failure to approve the plan will mean "a drop in U.S. exports, increased illegal immigration, and a currency scare in the rest of Latin America." And time is of the essence, Snow warns: If support for the guarantees unravels, the Mexican crash could get far worse.
With their mission clearly defined, the battle-tested NAFTA vets have swung into action. Plans for parachuting in former U.S. Presidents and dignitaries
for photo ops were considered, then scrapped for lack of time. Instead, corporate honchos have dusted off the so-called White Book assembled by USA NAFTA, the pro-NAFTA lobbying group headed by AlliedSignal Inc. Chief Executive Lawrence A. Bossidy. The book is a district-by-district directory of major corporate employers with strong export ties to Mexico.
CORPORATE CATALOG. "We have a catalog now of who's who in each district," says one top corporate lobbyist. "Each company has a procedure in place to activate folks to do what has to be done." Translation: Big corporate chieftains are at the ready to call their local representatives to voice support for the Mexican aid package.
Along with lawmakers representing export-dependent districts, the coalition is targeting legislators from border states to warn them that collapse of the plan could trigger a flood of illegal immigrants. Hispanic business leaders have gotten behind the campaign, too, pledging to launch a letter-writing blitz in favor of the bailout. On Jan. 25, the Congressional Budget Office gave the business lobbyists more firepower: The CBO now estimates that the bailout package would be likely to generate a small profit for the U.S. government through Mexico's payment of an upfront loan fee.
Meanwhile, Juan Gallardo, head of the powerful Mexican Business Coordinating Council, has set up in Washington to push for a deal. Among other tactics, the group will pressure U.S. suppliers to Mexican companies to support the bailout. Backers, however, have their work cut out for them. The aid package continues to meet fierce resistance from an anti-NAFTA coalition of unions, environmentalists, and America First conservatives. They view it as a risky bailout for a politically unstable and economically and environmentally irresponsible regime. The price they want for their support: stiff conditions that Mexicans would have a hard time swallowing. "Many critics are using this as an excuse to reopen NAFTA," frets Varian Associates Inc. CEO Tracy O'Rourke, head of the National Association of Manufacturers. "If that happens, we lose the coalition."
Playing the inside Hill game, moreover, won't guarantee a win. The bailout plan's backers aren't sure that the 73 new House Republicans who campaigned on promises to shrink government--let alone Democrats--will agree to shore up a foreign government at taxpayer risk. "None of us wants to be in a position of being accused of funding a bailout for Wall Street titans while we're cutting benefits to widows and orphans," says a senior Democratic aide.
Senate GOP conservatives, meanwhile, insist that Mexico create a currency board that would peg the peso's value to a strong currency. And in the House, Representative Barney Frank (D-Mass.), a NAFTA foe, is threatening a liberal walkout without guarantees from the Mexicans of improved labor standards. "Let's see them pass it without us," he warns.
Still, the Loan Rangers behind the bailout are confident they'll have a plan on the President's desk by February. Administration officials are willing to attach some strings to financial support, preferably through nonbinding side letters. Backers reckon that with fears of a hemispheric financial panic offsetting other doubts, the ayes should have it.
THE KNIGHTS OF NAFTA RIDE AGAIN
The pro-NAFTA coalition is back, fighting for a Mexico bailout against the same rivals who opposed the trade agreement:
THE PRO-BAILOUT POSITION
The Clinton Administration, led by Treasury Secretary Robert Rubin, wants to push through quickly $40 billion in loan guarantees for Mexico. CSX chief John Snow and AlliedSignal Chairman Lawrence Bossidy are reassembling the business coalition that helped win the 1993 passage of the North American Free Trade Agreement. To ensure support, the Administration is willing to attach more conditions to the bailout.
THE ARGUMENT AGAINST IT
NAFTA critics have been in full we-told-you-so fury since Mexico's financial crisis knocked 39% off the peso's value. Senate Foreign Relations Committee Chairman Jesse Helms (R-N.C.) vows "exhaustive and perhaps exhausting hearings" on a loan-guarantee package. He and America Firsters Pat Buchanan and Ross Perot are pushing for ironclad concessions from the Mexicans as a condition of aid. House Democrats who opposed NAFTA will demand other quid pro quos, such as guarantees of worker rights and stronger environmental standards south of the border.By Douglas Harbrecht and Dean Foust, with Amy Borrus, in Washington